Stockbroker Ketan M Parekh gets 2-year sentence for fraud

A special CBI court in Mumbai on Monday convicted stockbroker Ketan Manharlal Parekh on charges of cheating in a 25-year-old case. Special CBI Judge D W Deshpande sentenced Parekh to two years' rigorous imprisonment and ordered him to pay total fines of about Rs50,000.

Three other accused in the case, including a Bank of Baroda manager, were acquitted.

"He is not to be confused with Ketan Vinaychandra Parekh as is being incorrectly reported by several media channels," said the advocate who represented Ketan V Parekh, the stockbroker involved in the Madhavpura Mercantile co-op bank scam case of 1999-2001.

Parekh's alleged modus operandi was to rig share prices of companies through circular trading - a series of fictitious trades where a group of brokers would buy and sell the same shares in sequence to rig up prices. Following this, they would offload their shares at these artificially high prices, thus earning hefty profits.

The CBI had registered a case against the then senior manager of Bank of Baroda, Mumbai and others, alleging they had abused their official position and conspired with Parekh.

The Securities and Exchange Board of India (SEBI) had in December 2003 banned Parekh and associate firms from trading in the market for 14 years.

A Central Bureau of Investigation (CBI) spokesperson said Parekh pledged forged debentures and took loans in the name of his firms. Parekh then allegedly used this money to engage in circular trading.

The CBI had filed a charge-sheet in the court of the special judge, Mumbai under the Prevention of Corruption Act, 1988.While the special court found Parekh guilty and convicted him, the other three public servants were acquitted by the court.

Despite the ban on him participating in the stock market, there are persistent rumours that he is still active through a number of front companies.

Parekh, who had become a darling of the media and small investors, was seen in the early 2000 as the brave new face of Indian stock broking. However, like his one-time mentor Harshad Mehta, he too fell from grace when his scam got exposed.